New Delhi: India’s state-owned oil marketing companies (OMCs) are procuring ethanol at more than Rs 71 per litre in the current Ethanol Supply Year (ESY) after accounting for goods and services tax (GST) and transportation costs, the government informed the Lok Sabha on Thursday.
In a written reply, Minister of State for Petroleum and Natural Gas Suresh Gopi said the weighted average ex-mill price of ethanol for ESY 2025-26 stood at Rs 66.61 per litre. Including 5% GST and transportation charges, the estimated procurement cost was Rs 71.18 per litre for Indian Oil Corporation Ltd (IOCL), Rs 71.10 per litre for Hindustan Petroleum Corporation Ltd (HPCL) and Rs 71.21 per litre for Bharat Petroleum Corporation Ltd (BPCL).
The reply came in response to a question on ethanol costs and whether petrol had become cheaper to produce than ethanol.
The government said ethanol procurement prices vary depending on the feedstock used. C-heavy molasses remained the cheapest source at Rs 57.97 per litre, followed by surplus Food Corporation of India (FCI) rice at Rs 60.32 per litre and B-heavy molasses at Rs 60.73 per litre.
Ethanol produced from damaged foodgrains was priced at Rs 64 per litre, while ethanol made from sugarcane juice, sugar syrup and sugar was fixed at Rs 65.61 per litre. Maize-based ethanol commanded the highest procurement price at Rs 71.86 per litre under the first allocation cycle of ESY 2025-26. The prices exclude GST and transportation costs.
The minister said the pricing framework under the Ethanol Blended Petrol (EBP) Programme is intended to ensure adequate ethanol availability, provide remunerative prices to producers and support the agriculture sector, rather than maximise profits for oil marketing companies.
According to the government, despite the sharp rise in global crude oil prices during the ongoing West Asian crisis, public sector OMCs have continued to procure ethanol at around Rs 70 per litre, helping moderate the impact on domestic fuel prices.
The government said the Indian crude basket had risen to nearly US$135 per barrel at the peak of the crisis, but retail petrol prices increased by only 7-8%, compared with a 70-80% increase in international crude prices.
The reply also noted that public sector OMCs incurred an average under-recovery of about Rs 11 per litre on petrol, amounting to around Rs 21,300 crore, during the March-June 2026 period when the average depot price of petrol stood at approximately Rs 85.8 per litre.
According to the government, without ethanol blending and other policy measures, petrol prices could have risen to around Rs 125 per litre at the height of the crude price surge, compared with the Rs 94.77 per litre retail price in Delhi. It said replacing a portion of imported petrol with domestically produced ethanol has helped reduce India’s dependence on crude oil imports while limiting exposure to global price volatility and currency fluctuations.
